I recently had the opportunity to chat with Rajat Paharia, founder and chief product officer at Bunchball, about his new book, Loyalty 3.0, pivoting startups, and the differences between the business of games and the gamification of business.

Lilia: You were one of the first to see the potential for gaming methodology in marketing. What sparked this idea?

Rajat: The company I founded in 2005 was the right idea, but it was 2 to 3 years early to market. It was a social gaming platform, and in the process of building it, we examined what made gaming sticky. Pogo was one of the best, most used sites at the time, and they had all these statistics that they were able to stitch together into a really engaging experience. So we started building that idea into our gaming platform – for game results, but also to get people to do other things, like invite friends. We saw that it worked for motivating more than just behavior within the game itself – and that was the spark.

We realized that combining data with “gaming” concepts can be used in other interactions. We were still a small company, so we had to make a very tough decision – continue in the social gaming market, or shift to gamification for businesses. We chose the latter, but we were early to market – again. Ultimately, though, that turned out to be a good thing – because we had time to develop a strong skill set and effective motivation techniques.

***

Lilia: Bunchball has helped well over 300 companies, including dozens of global brands, leverage big data to drive gaming-inspired loyalty programs. What surprised you most about how those companies have put this technology to use?

Rajat: We started with B2C applications of gamification, but the surprise has been how rapidly the business has transitioned to B2B uses. Companies are using (our solution) to motivate and train employees in sales and service, and to influence partners. B2B has taken off and is growing incredibly fast. That’s something we didn’t foresee.

It makes sense, of course. Consider that Facebook, Amazon, etc. know more about your employees than you do. Yet companies ignore tons of data about employees who spend 8 to 10 hours a day working for them and delivering enormous value. That data lives in Salesforce, Jive, Cornerstone, Successfactors and all manner of enterprise apps and systems.

***

Lilia: Loyalty 3.0 requires Big Data. Does that mean only big companies can really use it for employee and partner loyalty?

Rajat: Our customers range from small companies, as small as 10 to 100 people, to the bigger ones.

What you need is to understand customers’ or employees’ motivation. Then you need data. And today we are walking data generators – constantly throwing off information that can be used to create loyalty 3.0 programs. Now, when I say Big Data, I’m referring to the large volume of data being generated by each of us as individuals – a lot of it unstructured. Those individual data streams are available to any business, not just large ones. Finally, you need Gamification – that is, you need to create data-driven motivational techniques.

***

Lilia: In your book you discuss the entry of Gen Y into the worksforce. Is it that younger generation that’s really the audience for gamification?

Rajat: No. It’s based on fundamental human motivators, so it works for anyone. The demographic of our customers’ customers and employees is across the board. The thing about Gen Y is that this is the air they breathe. So to motivate them, these methods are indispensable. Gamification works for everyone, but it’s absolutely critical for the Gen Y.

***

Lilia: What do you find is the most common misconception people have about gamification?

Rajat: The word is a double-edged sword. People think it’s games and entertainment. And they don’t want their employees playing games. They want them working. The reason these techniques came out of the gaming industry is because game designers have been living in data-rich environments for the last 40 years, and have had a chance to learn and develop all these techniques for motivating and driving behavior. Now the rest of the world has caught up. So gamification is really not about games at all. It’s about business results.

***

Lilia: Certainly wearable computing will create a huge opportunity for gamification through increasing the volume of data even more and through the “everywhere with me” aspect of those devices. What are some other emerging trends that you see either enabling or driving the demand for gamification?

Rajat: The notion of sensors everywhere. There’s a company across the street from ours that’s making ingestable sensors, powered by stomach acids. So you can tell exactly when the medicine was taken, and how the body responds. That means we can use gamification to motivate healthy behavior like taking your medication on time. More broadly, technology is mediating a lot of what we do – and all those systems are throwing off data that can be used to motivate behavior and inspire loyalty.

***

Lilia: Where should a company start when considering gamification?

Rajat: Always start by determining what you are trying to accomplish. What’s your goal? For example, “We want our channel partner sales team to contribute 10% more to the pipeline.” Gamification starts with a business mission statement. Then you decide how you will measure that. Then, understand what are the behaviors that I need to affect. Next look at users and understand what motivates them.

***

Lilia: That sounds straightforward, but how would a company actually know what motivates customers or employees?

Rajat: The best way to do that is by talking to a few of them. Ask them lots of open-ended questions. You only need to talk to a few to get really smart. We break it down in the book – how to craft an experience that fits, and create automated, scalable, repeatable motivation and intervention that you can use to motivate employees or kids.

***

Rajat’s book, Loyalty 3.0, launches June 18th through all the usual channels. In the meantime, you can pre-order at http://loyalty30.com/ and get extra gifts with your pre-order.

I bet you already have a long list of launch announcements and product training sessions for your 2013 sales kickoff. That’s important information, but it’s not enough.

If your sales people are still having difficulty engaging executive and business audiences, even after that expensive solution selling training you invested in so recently, it’s because they lack a good alternative to the product-centric pitch.

Executive audiences – whether IT or Business – don’t need your sales people to recite widely-known industry trends as an intro to the product pitch. They don’t want to waste a meeting hearing information they could just as easily find on your website.

They DO want

To see that you understand their business, in-depth

To hear new insights about how to apply technology to grow their business

To experience what it’s like to collaborate with your company

To be able to justify their decision to work with you

That means your sales people need a new arsenal. Here are some changes you can make in time for Sales Kickoff:

State a point of view. Give Sales something unique to say that customers haven’t heard from everyone else: Make some bold statements, show a distinct approach, or share a new perspective. Challenge common knowledge or the status quo.

Tell Stories. Replace recitations of product benefits with use case-drivenvalue stories. Provide sales people with stories that illustrate how you have helped similar companies (and will help them) create tangible business results within specific use cases by leveraging your unique capabilities.

Brainstorm. Turn sales meetings into collaborative brainstorming sessions by enabling sales people to discuss many options and approaches, point out the pros and cons of each, and explain how they fit with other products the customer is likely to need.

Over the last five years, B2B selling has evolved from general concepts of solution selling to the ‘Buyer’s Journey’ – a journey driven by the large amount of information available online. A new sales and marketing reality is rapidly emerging as the internet plays an increasing role in buyer research. I’ve seen the impact of this in my own marketing work, and I strongly believe we are on the cusp of some important changes to the conventional marketing and sales wisdom of the past

Studies are consistently showing that B2B buying habits are shifting. Buyers are now 60-70% of the way through the buyer’s cycle before they reach out to your sales representative. By that time, there is less need for traditional solution selling techniques. In the new buyer’s journey, the buyers believe that, based on their own research, they have figured out what they need. When they decide to contact your sales team, they have most likely decided you are one of their top three choices – you are 1 of 3.

Maybe this sounds like good news. It’s not. Most often the buyer views all three choices as equally acceptable, and the final decision comes down to features, functions, support—and price, price, price. Exceptional sales representatives might be able to overcome this ‘1 of 3’ syndrome, but this is the antithesis of where you want to be with solution selling.

In this new selling environment your biggest hurdles are no longer your competitors or features and functions; they are:

The ability of buyers to learn on their own

How your company participates in that learning process

As the CMO of SAP, Jonathan Becher, said at a recent Churchill Club CMO Panel, “Being marketed TO is a mindset we need to end. It’s helping (the buyer) discover what they want to learn about.”

Are you experiencing this phenomenon? Has it changed your marketing strategy?

The fifth trend that emerged from Churchill Club’s recent Chief Marketing Officer Agenda 2013 event was the expansion and diversification of the marketing role and skillset. Several new, or newly important, areas of responsibility are driving the need for new skills:

Marketing organizations are aligning more closely with sales objectives. The four speakers from SAP, Intuit, Google, and DreamWorks all mentioned revenue as a key marketing metric. Nora Denzel, Senior VP, big data, social design and marketing at Intuit, said her company considers its marketers to be “growth officers.”

Marketers are often the customer advocates in the company. At Google, Marketers not only evangelize the company externally, but also “play a big role internally in evangelizing on behalf of the customer,” according to Lorraine Twohill, VP global marketing there.

Marketers are also increasingly responsible for customer experience and engagement. Lorraine Twohill mentioned that one of her organization’s main responsibilities is to “make technology mean something to real people in their daily lives.” The focus on customer experience also translates into marketing having greater involvement earlier in the product design process. DreamWorks CMO Anne Globe describes integrating movies with games as a way to engage viewers – a tactic that erases the lines between product development and marketing. (See previous post: The Product IS the Sales and Marketing.)

These roles obviously extend well beyond marketing’s traditional purview of awareness and lead generation campaigns. Google’s marketing organization now includes coders, artists, analysts, and gamers. According to Lorraine Twohill, Google likes to hire marketers who don’t see the old functional limits, but can imagine completely novel ways of engaging customers. When Nora Denzel was asked about hiring, she echoed the sentiment: “We want a diversity of skills and backgrounds, and people who can do multiple tracks.”

Bottom Line: Consider what role your marketing team can play to provide the greatest value to your company and customers, and what new types of customer engagement are emerging in your industry. Then

Identify the skills your team will need in its future role.

As you outsource leading edge techniques and tactics to 3rd parties, pay attention to which specialists and skillsets they have on the team.

Consider hiring people who have an in-depth understanding of your customer, but from a very different perspective and background than the existing team.

The proliferation of SaaS and Apple’s demonstration of the impact of product design and user experience, have changed how marketers and their companies look at products. The lines between product management, product development, marketing, and sales are disappearing as quickly as chocolate from my kitchen.

At a recent Churchill Club CMO panel, Nora Denzel, Senior VP, Big Data, Social Design and Marketing at Intuit articulated this trend best with the comment, “our product IS the funnel.” She described that Intuit customers make decision based on product use, not marketing messages. Their experience in using the product determines whether they spend money on it. That should be old hat to anyone offering a freemium model, but may not be explicitly understood by companies new to the products as services environment. Even more traditional products are evolving to play a bigger role in sales and marketing. Interactive TV guides provided by carriers upsell on-demand channels and premium content, toys include complimentary on-line gaming components that cross sell more toys, and grocery packaging offers recipes that promote sister brands and products.

A key implication of this product-as-sales-tool trend is the accompanying change in product design and development, which marketing leaders clearly recognize. Jonathan Becher, CMO at SAP remarked that “product launch is the day you sat down to decide what product you are going to build.” To which Laura McLellan of Gartner quipped, “If marketing gets involved when the product is done, engineering gets what it deserves,” voicing my own observations that R&D culture has been slow to change and, in some companies, still drives product roadmaps with a myopic focus on technology and features rather than user experience. (You know who you are.)

Taking it a bit farther, Jonathan Becher described a vision of product development in which just-in-time creation of features and designs that respond to the customer’s current preferences would replace precisely targeted marketing of existing products

Bottom Line: Whether you’re delivering products on-premise or as service, your Product Managers should have among their top design criteria:

Ease of use and high quality customer experience

Opportunities for customers to experience the product before they buy

Usage and behavior-based upsell and cross sell features

Seamless integration of usage, behavior, and request-based support and social features

Intelligence and analytics capabilities that use information like product configuration, user behavior and preferences, and transactional data to provide additional value to your company and to customers

In 42 Rules for Growing Enterprise Revenue, I talk about the fact that customer relevance is a corporate skillset, not a departmental one. Creating a positive, customer-relevant experience involves many parts of the organization, and the speakers at the recent Churchill Club CMO panel provided lots of validation and great examples of why shared ownership is critical.

Nora Denzel, Senior VP of Big Data, Social Design and Marketing at Intuit commented that Intuit’s CIO, sales, and marketing all contribute to create the customer experience. Lorraine Twohill, VP of Global Marketing at Google agreed that cross-functional collaboration is critical because while Marketing focuses on customer acquisition, keeping customers and making them happy is what sales, support, and IT (in a SaaS company) do. Jonathan Becher, CMO at SAP, summed it up well. “The SAP experience is about the company, it’s not a marketing thing. If it were, no one would pay attention,” he commented.

Bottom Line: Consider making great customer experience an objective for every organization that impacts it.

Ask each functional team to identify specifically how they affect customer experience.

Set detailed objectives in your annual and quarterly plans for how they can improve the department’s contribution to a great customer experience.

Identify opportunities for cross-functional initiatives to offer new value to customers. It’s these that often have the greatest impact.

Please share how different parts of your company are collaborating to serve customers better.

Last week I had the opportunity to attend a panel discussion with some of Silicon Valley’s top CMOs: Jonathan Becher, CMO at SAP, Nora Denzel, Senior VP, Big Data, Social Design and Marketing at Intuit, Anne Globe, CMO at DreamWorks Animation, and Lorraine Twohill, VP Global Marketing , Google. The moderator was Laura McLellan of Gartner.

Some interesting themes emerged from the discussion. Here, and in subsequent posts, I’ll summarize the CMOs’ comments and add some perspective about the implications for marketers and their companies.